Otherwise known as multiple representation, word is that the Ontario government is set to out law the practice. 

 

So what exactly is multiple representation, and why is banning multiple representation a good or bad idea?

 

I believe that the crux of the issue is not so much multiple representation, but the fact that the general public is often unaware that there are various types of representation available, what they entail AND that they get to choose!

 

Let's explore each type of representation and how they impact the Buyer (A Seller is a Client by default unless otherwise stipulated).

 

A buyer or seller may not wish to be under contract as a client with the brokerage but would rather be treated as a customer. A REALTOR® is obligated to treat every person in a real estate transaction with honesty, fairness, and integrity, but unlike a client, provides a customer with a restricted level of service. Services provided to a customer may include showing the property
or properties, drafting the offer, presenting the offer, etc. Brokerages use a Customer Service Agreement to document the services they are providing to a buyer or seller customer.

Under the Act, the REALTOR® has disclosure obligations to a customer and must disclose material facts known to the brokerage that relate to the transaction.

 

Client
A “client” relationship creates the highest form of obligation for a REALTOR® to a consumer. The brokerage and its salespeople/brokers have a fiduciary (legal) relationship with the client and represent the interests of the client in a real estate transaction. The REALTOR® will establish this relationship with the use of a representation agreement, called a Listing Agreement with the seller and a Buyer Representation Agreement with the buyer. The agreement contains an explanation of the services the brokerage will be providing, the fee arrangement for those services, the obligations the client will have under the agreement, and
the expiry date of the agreement. Ensure that you have read and fully understand any such agreement before you sign the document.
Once a brokerage and a consumer enter into a client relationship, the brokerage must protect the interests of the client and do what is best for the client.

 

A brokerage must strive for the benefit of the client and must not disclose a client’s confidential information to others. Under the Act, the brokerage must also make reasonable efforts to determine any material facts relating to the transaction that would be of interest to the client and must inform the client of those facts. Although they are representing the interests of their client, they must still treat all parties to the transaction with fairness, honesty, and integrity.

Now let me toss you a curve ball... no matter your choice (Customer or Client) your contract is NOT with the Realtor, but with the Brokerage with which the Realtor is a member of. What does that mean you might be wondering? Let me provide an example:

 

I am a member of Century 21 Fine Living, you are looking to buy a home and we have a Client relationship.

You want to offer on a home listed by Ricky Munshaw who is also a member of Century 21 Fine Living.

 

This is a multiple representation scenario.

 

I don't believe that my scenario is what the government is looking to end. I believe that they are after the listing agent who represents the buyer as well and with good reason. As with all professions, there are honest, good, hard working people and there are those who are less scrupulous who break the rules and don't always act with fairness, honesty, and integrity. Furthermore, I believe it is next to impossible to provide client service to both the Buyer and Seller as they have competing interests!

 

In the past if I've had a Buyer who wants to purchase one of my listings I recruit a colleague to represent them. Does it mean that the seller pays more commission - no, I always include a provision in my listing agreements where by if the brokerage represents both parties the total commission is reduced by x% thus providing the seller with a discount.

 

Does it mean that I earn less money - yes, as my share of the listing commission does not change, the remaining commission after discount is awarded to the buyer's representation; same as if the Buyer came with his/ her own Realtor... albeit not a full 2.5%.

 

There are many stories in the news about Realtors cheating the system, disclosing offer details and manipulating Buyers and Sellers. I like to think that these are the few bad apples and that they are not representative of the profession.

 

Everyone makes mistakes, but when choosing a Realtor to work with be sure to do your homework and ask questions. Buying and Selling your home is likely the largest purchase you'll make in your life, don't leave it to chance; we're not all equal in the value or in the level of service we provide.

 

Please be sure that in the very least your Realtor understands his/her duties and acts accordingly.